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Teal Mountain Leasing Company signs a lease agreement on January 1,2025, to lease...

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Accounting

Teal Mountain Leasing Company signs a lease agreement on January 1,2025, to lease electronic equipment to Sandhill Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement.
Sandhill has the option to purchase the equipment for $19,000 upon termination of the lease. It is not reasonably certain that Sandhill will exercise this option.
The equipment has a cost of $190,000 and fair value of $238,500 to Teal Mountain Leasing. The useful economic life is 2 years, with a residual value of $19,000.
Teal Mountain Leasing desires to earn a return of 5% on its investment.
Collectibility of the payments by Teal Mountain Leasing is probable.
Click here to view factor tables.
(a)
Your answer is partially correct.
Prepare the journal entries on the books of Teal Mountain Leasing to record the payments received under the lease and to recognize income for the years 2025 and 2026.(List all debit entries before credit entries. Credit account titles are automatically
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